Apple to Join Acorn, VLSI in Chip-Making Venture

SAN JOSE — Apple Computer, chip maker VLSI Technology and British computer vendor Acorn Computers announced Tuesday that they had formed a joint venture company to design and market computer chips based on reduced instruction set computing (RISC) technology.

The new venture, based in Cambridge, England, will further develop chip technology that was pioneered by Acorn. Apple has invested about $3 million (roughly 1.5 million pounds) for a 30% interest in the company, dubbed Advanced Risc Machines Ltd. (ARM), but the exact ownership stake of VLSI and Acorn was not disclosed. Additional partners are being sought, and ARM will also try to get funding from one of several European Community technology development programs.

Acorn, which is 80% owned by the Italian computer giant Olivetti, has over the past five years developed a series of RISC microprocessors--or computers-on-a-chip--primarily for use in its own personal computer products. RISC dramatically improves computer performance by cutting down the number of individual instructions a machine must execute to carry out a given function, and many regard it as the key to a broad range of future computers.

But while RISC chips from such well-known firms as Sun Microsystems, International Business Machines and Hewlett-Packard have been designed to improve the performance of high-powered desktop computers, Acorn has focused on making small, inexpensive RISC chips that don't use much power.

The ARM venture will retain that orientation, aiming to produce RISC microprocessors that will be used in small portable computers and for so-called embedded control functions such as controlling laser printers, tape drives and other computer peripherals. The ARM-designed chips will be manufactured by VLSI Technology of San Jose. Sanyo Electric Co. of Japan also has a license to produce the products.

Apple Vice President Larry Tessler said Apple had no specific plans to use ARM chips in its computers. He said low-cost, low-power RISC chips would create "a lot of exciting new products in the industry," but that Apple regards the venture as a good investment in support of good technology rather than a source of future products.

Apple has previously taken equity stakes in companies from which it did not buy products, but it has never before invested in a chip firm. Some analysts speculated that Apple might be eyeing ARM chips for use in a future notebook-sized computer, but Tessler declined comment on future products.

VLSI Senior Vice President Douglas J. Bartek noted that the market for embedded control processors--which are invisible to the computer user but perform critical functions--is expected to be worth $200 million a year by 1992, up from just $18 million in 1989. "The volumes are absolutely huge," he said, even larger than the volume for the more well-known RISC workstation chips.

Marc Elliot, an analyst with the chip research firm Dataquest, said it appeared that the ARM chips would be "very viable products," both as embedded control devices and as traditional microprocessors.

Erik N. Jansen, an analyst with the investment banking firm Robertson Stephens & Co., added that the venture was "a heck of a deal for VLSI Technology," which gains the prestige of a joint venture with Apple and access to some potentially hot-selling chip technology.

"This is the first effort to present a broad range of system-level RISC machines that are low-power," he said. "The product sounds right to me."